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News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

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Us 41, U.s. 15, United States 14, Google 13, Europe 13, Ibm 12, Britain 9, London 8, Becky 8, Joe 7, David Cameron 7, New York 7, Spain 7, S&p 7, America 6, Jim 5, China 5, Csx 5, Italy 5, U.k. 5,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    January 23, 2013
    6:00 - 9:00am EST  

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good morning, the bulls in control. the dow turns in its eighth day of gains in the last nine sessions. the catalyst -- quarterly numbers. tech giants, couple of them, beat the street after the bell last night. plus, the world economic forum, the most powerful names in business and government gathering in davos, switzerland. wednesday, january 23, 2013. and "squawk box" begins right now. ♪
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welcome to "squawk box" on cnbc, i'm becky quick with ross westgate. andrew is reporting from switzerland. that's why we've got the mountain music. we'll get to andrew in a moment. first, the top stories. the common theme here quarterly results, shares of google getting a boost. earnings and revenue topping consensus and perhaps more important metrics, revenue from google's core internet business. it outpaced many analysts' expectations. advertising rates fell less than in proves periods. as you see, the stock was up -- this morning up almost 5% in the premarket. ibm shares jumping after the bell. earnings and revenue beating the street, as well. the world's largest technology services company offering a better than expected outlook for 2013. that stock, as you see, up by 4% in the premarket. also, we had advanced microdevices. it came in with a smaller than expected loss in the fourth quarter. the shares were rising in the after-hours trading. you see this morning down about .4%. here's the issue -- company's quarterly expectations in terms
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of the chip's forecast, it didn't meet expectations. also, amd's ceo is warning of choppiness in the p.c. market as smartphones gain traction with consumers. yeah, more technology news. texas instrument's fourth quarter revenue topped expectations. there's widespread customer reluctance to order until the last minute because of macro economic worries. there's a mixed picture for you. the giants of technology yesterday actually came in with better than expected news. that's what really boosted things after hours. we'll look at how things will be trading this morning. we also have that flood of earnings that continues this morning. today on the calendar, we have mcdonald's, united technologies, motorola solutions, coach, and wellpoint. just a few of the names we'll be watching. then after the bell this afternoon, you've got apple coming out. still the world's most valuable public company. the stock fell below $500 last week for the first time in 11 months. shares have fallen nearly 30% since peaking at $705.07 on
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september 21. that, by the way, the day of the iphone's release. joe? >> okay. thanks. i was saying -- january 23. you know this is the last day it will be january 23 until a year, until next year. you know how we've been saying that about these things, palindromes, we won't see another in -- 2002 for 90 years. at least 12 months before it is january 23. let's head to the economic forum. world economic forum. andrew messaged me with that fact. he is standing by in davos. and andrew, we don't know who you have for guests today. we're more interested in obviously the fashion forward looks you're going to be bringing us. hopefully you're going to have -- >> yeah -- >> every hour. you'll be, you know, like when -- on a variety show. they come out in a different -- you'll do that, right? >> i got different sweaters for every hour. different coats for every hour.
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a complete fashion show from top to bottom. i am wearing, as i've talked a lot about on "squawk" my tommy john undershirts and long underwear. >> we need to see those -- >> part of the fashion show. >> we'll need to see those. >> i don't know if we'll get to that. >> i wore some of those -- >> i don't want to have a credit ratings problem. >> i wore some of those -- that i was sent. it had instructions, no flap, lift -- you know, it had things. but i liked them so much i wore them for a week. >> what? the same pair? >> yeah. >> oh, gosh. >> e www -- >> no. >> they do have that -- they have a smell-resistant something, they're supposed to. let's -- >> no, it only lasts so long. only last so long. >> keep it clean. >> andrew, what's the temperature there? >> i bet it's warmer than here. >> yeah. >> what is the temperature sneer about 25 degrees. >> cold. >> it's cold, everybody. >> it's 10 degrees here. >> i know, it's colder in new york. >> president obama made his entire speech about global warming, and the next day it was 10 degrees. anyway, that's neither here nor there. you go ahead.
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>> good news is it is warmer inside than it is outside. >> it's exactly -- exactly 23 degrees here, by the way. >> that's a heat wave. >> a quick lay of the land of what's going on here. 2,-600 politicians, business people, media all over the world coming here, converging here. today's just the beginning. by the way, we have a big show today lined up. but also throughout the week. you'll be seeing lord blankfine on "squawk," ray dalio, your good friend, sean parker, coming here. we'll have a party. we can talk about that. he just had a child, by the way. we have a lot to do in davos. there's already news being made this morning, and that's coming from an old "squawk" friend, jamie dimon, who was on a panel this morning talking about regulation, banking, and transparency. and he made some people upset this morning with this comment. take a listen to it. >> businesses can be opaque, they're complex. you don't know how aircraft engines worth either. we provide a service to you.
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we make a little money every time we do it. that's what happens. >> that -- that actually had a lot of people frustrated, the fact he was comparing the banking system to an engine on an airplane and that you don't need to know how it actually works. the big issue, of course, is do regulators understand how it works. he also made another comment trying to defend the banks saying that they were actually a friend of the system and the economy. take a listen to this one. >> i think jpmorgan was a -- was not just a fair weather friend. we were there in good times and bad times for everybody, including nations. for spain and italy we will tell you -- we were lending $15 billion net of collateral. net derivatives, spain and italy. yes, it's governments and multi- nationals if you want to be transparent. what would you do? what would you all do? if you were my board of directors, it's easy to say don't take the risk. move out. we've been in spain and italy, one for 60 years, wur finish
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over 100 -- one for over 100. we're not a fair weather friend. companies want us there. we have to manage that risk. something may go wrong. >> got to tell you guys, the feedback after that panel was actually not good. a lot of people criticizing jamie just in the hallways. obviously a lot of people happy to see him defending the bank. a lot of bankers here. the mood, nature of where we are. there was some criticism. the other big news, by the way, not happening in davos -- yeah? >> i was going to say quickly, that may be more a reflection of davos than anything else. i listened to the comments and thought, you know -- >> yes. >> that makes sense. he's right. there's a lot of things businesses do that really help us out in a lot of ways. and it may not be popular for him to be saying that, given the -- the issue that just happened. i agree with him. >> right. should say he apologized for the wale for the bigillionth time.
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the audience is different here. it's a european audience. there's a different set of constituents in the audience. the mood and feeling you get here is often different than what you might get in the united states. but it's worth describinging what's happening because it does reflect on the global mood. the other big piece of news and then we have a guest next to me, i want to get to him. a good friend of "squawk," as well, david cameron. david cameron making comments in london this morning, saying he is prepared to have an up or down vote on whether britain should leave the e.u. and what that would mean. that has a lot of people talking here about the implications for the u.k., for europe. whether -- we had this big discussion about new york versus london. what happens to the banking system. what happens to the financial? that is the u.k. that's become a big i issue. let's bring in a good friend, as i said, of "squawk." bob hormatz, you know him well.
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a new -- not a fancy new title, but you're the under secretary of state for economic growth, energy, and the environment. that changed a year ago? >> yes, we tried to pull these together. increasingly what happens in the economy has an impact on the environment. environmental issues and energy issues are increasingly intertwined. >> always big in davos. and david cameron, it has an impact on the global economy if this were to go forward. the chances of it going forward i think are small. he has to get re-elected in 2015 to propose the up or down vote in 2017. it does put a cloud over the u.k. and e.u. a bit. >> the u.s. view has been not to get involved in u.s. politics. the u.s. view is that -- involved in u.k. politics. the u.s. view that a strong u.k. and e.u. is good for the u.k., for europe and the united states. we'll let the brits sort out their politics internally. that overall view is one we've
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been thinking. >> this f they were to cede -- if they were to cede, what would that mean? >> i think it's not wise to speculate about what would happen if certain eventualities were occurring, were to occur. and as you say, it's too early to make predictions. >> let me ask you this -- i was at a dinner last night with a number of people you know well. our viewers know well. an off the record dinner. i will say the topic was does globalization still work. you know, this is a place that -- we're looking out where all you do is talk about globalization, people support globalization, what it means. is it possible that we've run out of string, that it doesn't work the way we thought anymore? >> i think there are a number of pushbacks to globalization. particularly as the global economy slows down. there are people who are concerned that globalization can have -- can affect jobs. there are a number of countries engaging in forced localization to force companies to produce more in their own home market than they have before.
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a number of days in europe where banks -- number of cases in europe where banks are pulling back from european-wide lending. on the other hand, global supply chains are becoming denser and more intense and greater. >> ultimately still good for us -- when it was working for us, it was working very well. at some point it may not work as well for us. >> i think it still works quite well for us because 95% of the world's consumers are outside of the united states. the fastest growth in the world is outside the united states. particularly in emerging economies. the average company in the united states and elsewhere depends on global supply chains. >> right. >> therefore, it's very hard to pull back. there are opportunities abroad. on the other hand, we need to take advantage of the opportunities, but also make sure that we enforce and force wto and others to enforce global trade rules and make sure there's a level playing field. that requires a lot of work with newer economies. >> one of the big issues in davos, and it's actually a pet issue for you, this lost generation issue. >> yes. >> there's a lost generation,
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not just in the united states but globally. it's actually -- you know, sort of teen, 20 years. people in that age group that don't have jobs, and it doesn't look like they'll have jobs. what does that mean for the global productivity of the world? >> that's a huge challenge because if you look at countries around the world -- i go to the middle east and go to a number of countries, there are a lot of young people. it's not just the emerging world but greece, spain, many parts of europe. and in the united states where young people find it very difficult to get jobs. and that leads to social problems over a period of time. the longer you find yourself waiting to get a job, the more you fall behind in the experience curve. the other is for the united states, people take out, kids take out these college loans, and there's a trillion dollars worth of unpaid college loans. so not only can they not get jobs, they don't get the experience of that first job. but they incur a lot of debt. we're going to have work with other countries to help them increase job opportunities,
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otherwise there will be instability. we need to invest a lot more in younger people in the united states, in part to give them an opportunity, but we have an aging population. >> right. >> who's going to pay the dividends and interest and taxes to sustain an aging population if young kids are not trained in productive jobs? >> a huge issue. joe kernen's got a question. >> hi, joe. >> bob, what's going on? good to see you. we've got -- wow, you're getting kind of uppity. we've got to go all the way to switzerland to get you to come on the show now. >> it's always a pleasure to come on your show. >> a good friend, jack welch, i listen to what he says as basically gospel. but not everyone does. he tweeted recently about the inaugural speech and said no mention of economic growth or things to spur economic growth. no mention really of jobs and the unemployment rate. as the under secretary of the treasury for growth, when do you
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actually kick in to action? you can probably coast because we probably won't see any for a while with the latest policy. but do you get called into action when there is the prospect for some growth, or when do you actually start working on that? >> well, i think there's going to be growth. i think, in fact, growth's beginning to pick up in the u.s. economy. i think the energy revolution in the u.s. will be helpful. i think corporate balance sheets are in good shape. housing market's going to be coming back. the part i'm involved in is really on the international side. and that is we've been doing a great deal to increase exports. the president had a goal of doubling exports over five years. we're doing very well in that area. we're beginning to attract more and more foreign investment into the united states. we're also beginning to encourage american companies that have been investing abroad to come back. all those things will be good for growth. >> were you disappointed -- don't you think you could have talked more it growth instead of just expanding government? isn't that really -- couldn't we
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afford all these things more easily if we were growing at 3% or 4%? i'm wondering, the governor of nebraska now, i guess, said that the excel pipeline should go through. what do you think that obama's going to do now that he talked about climate change the entire time, will he build out hydrocarbon infrastructure in terms of jobs, or will that fall by the wayside now that he's got a new term? >> i'm going stay away from the pipeline issue. let me make a few points. one, obviously the faster we grow the better it is. but there are a lot of things that the president has advocated that will strengthen opportunities for growth, more investment and infrastructure. it's critically important. not only to be creating jobs but to making us a more productive economy. there has been a big increase during the -- ibm's first term as president in increasing lng, tight gas, fracking, there's been a lot of work done to make
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sure that we're doing that. but also in an environmentally responsible way. so i think a lot of the things the president has done have enhanced the prospects for growth in the second term and beyond. and he wants to invest more in the united states. i -- i don't think he's anti-growth. i think he's pro-growth. but i think he's particularly focused on investing in the u.s. to give us a sound basis for growth. and also i think you'll see over time that there will be a greater effort to put our economy on the sounder financial footing which i know we intend -- he intend to do. it's going to take a lot of work with the congress. >> before you go -- >> andrew, i'm more -- >> go ahead. >> i'm more worried about texas leaving the union than -- than great britain leaving the union. yeah. >> and the u.k. -- >> after that speech. yeah. all right. sorry. >> i'm not worried about any country -- state leaving the union. i'm, in fact, more and more interested in attracting foreign investment that creates jobs --
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>> good luck. >> into the union. i think beef actually done that. that's coming more and more. i'm going to india. more and more indian companies are interested. companies from all over the world see the united states as an opportunity. we still have good corporate management. we still have a lot of innovation. there are a lot of companies that want to come to the u.s. and now with the opportunity on -- on energy, that's very important. the one point we also have to realize, energy itself is not a panacea. we have to place a lot more emphasis on human capital, particularly educating younger kids, not just college-educated kids but kids who get good vocational training for the kind of jobs that we're going to need. we're going to need to not just rely on energy but a whole lot of other things to make us competitive, including infrastructure. >> okay. we're going leave it -- actually, one final question. hillary clinton, how's she feeling? >> hillary clinton is feeling great. we just had a ceremony where we gave her a football helmet for her to wear around the house. but she has done a fabulous job. she'll probably be leaving soon.
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we'll all miss her. but i think one of the things that she's done and i want to emphasize this, the state department now is playing an active role in supporting american companies around the world. and i think that is one of the very important legacies. other governments are supporting their companies, the state department and other -- >> are you going to stick around? >> i hope to stay around for a while longer. >> i imagine we may see you on the "squawk" set. thank you very much. back to you. becky and joe. >> okay. thank you. we'll check back with you. did he say he was wearing those -- those tommy johns? >> he is wearing them. >> looked calm. didn't look like he was shivering or anything. >> no. he's -- he -- >> it helps. if your legs are cold or worse yet, if -- >> the jacket on. >> if your legs are cold or worse yet, you know, if you're cold -- i mean, it just -- you don't want to be, you want to feel secure. >> what do you mean? >> we want to feel secure and warm from -- if your undercarriage. secure and warm in your undercarriage.
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i think he does. he does. as we mentioned, u.k. prime minister david cameron is promising to give britains a straight referendum choice on whether to stay in the european union or not. not until 2015. and that is assuming that he wins re-election. >> he's been pressured by a lot of members of his party because they don't like the setup in the e.u. they would like him to renegotiate or get out. he's saying they would renegotiate a deal and then let the voters decide whether they want to go forward -- >> he looks like the other guy. that he was like running the -- >> oh. >> and he kind of looks like the "king's speech" guy. >> a little like that. >> doesn't he? looks like lord grantham if he were to gain weight. loort -- uh-oh. look who i got to toss to, who will have a problem with something i said. kelly evans, kelly evans joins us from london with the details. she's like madonna now. she calls trash rubbish. she stands in queue.
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she goes and -- right? basically you have a little -- i hear it now. i hear a little built of an accent. i know when you come back you're not going to lose. >> i don't have an accent. i'm not madonna. i am going to try to give you a sense, though, of the fallout here, joe. this is a big story this morning. remember, this goes back, the speech we were supposed to hear from david cameron last october. he's postponed this a number of times including last friday morning. now the timing is interesting. he comes in. the day he was supposed to be in davos. while the world attention's focused on davos, he gives this speech. awkward as you were describing. he is dealing with tension from his own party to push for a referendum. at the same time not trying to be too explicit and calling himself for the need for that referendum. stocks here in europe reacting mixed. in london it's less about the speech and more to do actually with strong results from unilever. we'll get to that in one second. here's a snipet from what cameron said this morning. >> there is a gap between the e.u. and its citizens which has
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grown dramatically in recent years. and which represents a lack of democratic accountability and consent that is, yes, felt particularly acutely here in britain. now if we don't address these challenges, the danger is that europe will fail and the british people will drift toward the exit. >> polls indicate that brits are mixed on the issue. david cameron says he'll pursue this if he's elected. that's 2015. the potential for a referendum looks toward 2016, 2017 even. earlier, after releasing results, i sat down with unilever's ceo, paul polman. the shares hoping to boost the footse 100, up almost 3%. they own ben & jerry's. they one of the biggest consumer brand countries in the world. they are -- brand consumers in the world. they are announcing strong
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growth in emerging markets in the union. it would be bad for business? here's what he had to say -- >> if you create a certain level of uncertainty between now and 2017 or whatever the day will be of a proposed referendum if this is -- haven't see the speech, but if this is what comes out, you create a period of uncertainty that is not to the benefit of business. >> not to the benefit of business. echoing their comments. when we spoke with guys, ross and maria out at davos and the chatter they picked up, echoing what andrew was saying to some extent, this concern for a lot of ceos in britain or for big multinational companies that, great, here's another thing that they'll have to worry about. and not just for the next couple of months, possibly for several years. on that, back to you. >> kelly, you know, people are still wondering when -- when great britain will become kind of a full-fledged member. using the euro and everything else. i guess it makes it less likely
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that they'll adopt a common currency. if they're thinking about leaving the union. >> absolutely. no, there's a widespread sense of relief that britain isn't more closely tied in. if you leak at the performance of the economy, the fact britain has its own central bank, it can pursue monetary policies or policies appropriate for britain and not have to worry about other member states certainly is being taken as a sign of relief. and there's very little sentiment certainly for joining the euro now. although i will say the bank of england numbers fight they're not happy with how strong sterling is. they think currency should be weaker and it could help performance going forward. echoing the currency that we're starting to hear this year. >> no talk about becoming the 51st state which they probably have wanted to do for a while given how we excelled after we broke off. they could come back into the fold, perhaps joining the u.s. and adopt the dollar if they really wanted some -- any talk of that at this point? would that be too much for them to swallow at this point? to admit that --
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>> no talk of that. >> to admit that they're -- >> no talk of joining the dollar. there is plenty -- >> the british empire declined to the point that they should join with their former colleague. >> be an american one -- not. britain is trying to position itself as this place between america on the one hand and europe on the other. and can it sort of be almost a global center for trade and for capital flows and for finance. interestingly jim o'neil at goldman likes to call london the capital of the bricks. to him the relevance of london is almost more so to brazil, russia, india, and china, even to the english. so yeah, they're trying to re-imagine what that position will look like going forward. believe me, this comes down to two issues. the financial industry with regulation coming from the e.u., and immigration because there are a lot of people here worried about t-- more people coming to britain looking for jobs. >> the dow acknowledger countess, maggie smith going, you got to watch that. she's like the idea of what i just said. she's -- looking around.
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she can't -- shirley maclaine going, yeah. >> all right. thank you. we'll check back tomorrow. when we come back, we'll talk about why japanese officials say that the problems with the dreamliner might be different than first thought. we'll look at the futures. a lot of action that's been happening here. you'll see the dow future up another 43 points. this comes after the s&p up five days in a row. dow jones industrials, s&p 500 closed at five-year highs once again. the dow transports and russell 2,000, they are at historic highs. >> woohoo! party. >> we'll see where everything goes. this is america. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn
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welcome back. ibm, that's all i got to say, up -- fight up seven points. that's got a lot to do with why the dow looks like it wants to be up nine out of ten days with the transports and a new high. s&p 500 hitting some recent highs, up -- five-year levels. will the dow finally goat a new high? cbs filing an amended lawsuit against dish network. accuses the satellite tv company of concealing material facts about its ad-skipping technology. is that the hoppa? >> i believe it is. >> the hoppa. remind me of hotta. they're in negotiations --
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>> i watched that -- >> did you watch? >> yeah. >> a legal battle erupted last year between dish and major broadcast networks. that issue is dish's hoppa dvr which lets viewers -- i can barely read this, it's so heretical. lets viewers skip over commercials when they watch recorded shows. >> you never use the dvr? >> this is not the -- >> fast forward. this is a skip versus -- >> this is not the red cross. i'm asking you people, why our commercials and support our sponsors. it doesn't work without that. in other corporate -- look at your internet. every time you hit something up, there's an ad. we need ads. it's what makes the world go around. >> ads -- >> charlie ergen is the devil. in other news, boeing, japan's transport safety agency says that the lithium ion battery on a dreamliner that overheated during a flight
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earlier this month experienced a sudden drop in voltage. the agency says the battery was not overcharged as previously thought to be possible. now we've got to figure out -- >> good news or bad news? >>. >> takes longer to fix the problem? >> i don't know. and was the second -- it was carbonized and it was lighter, but did it ever -- it was combust single in we don't really know. the smell, but it wasn't smoke. >> maybe this is busy because if the two aren't related -- >> maybe they need to look even -- complicates the -- >> right. i think that's what bill was saying yesterday, if they're not related, it's a bigger problem. it's not as quick to be able to tie all these things together and say, okay, we can find a fix. also, in washington today, the house is set to vote on temporarily extending the debt limit. this is a so-called suspension. it would allow the government to borrow money until may 19. the white house says that the president would sign this bill if it clears congress. this is a house bill, though, also has to go through the senate. and while it pushes things off, it doesn't resolve things. does change the focus, though,
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so that they're looking more closely on the budget because this also ties in the idea that whatever house of congress doesn't pass a budget will not get paid. it puts more pressure up because the senate hasn't passed a bill, budget bill in four years. so we'll see what happens. it changes the nature of the debate. >> had a long talk yesterday about google. remember? jordon rowan. and the shares are rising in early trading. joining us is daniel ernst, principal at hudson square research. jordon had a lot of concerns about google. what do you -- how's google looking to you, where the shares are this morning? >> there was one positive number in the results that i think is causing the stock to be up. the prices declined less. a story of less bad. they had a 6% decline year over year in the cost -- the price that they charge per click versus a 15% decline in the prior quarter. you sort of have a second
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derivative positive in things getting less bad on pricing. but overall, take out all the noise, core google growth has slowed. and that's my big issue with google. paid clicks grew 24% year over year. last quarter it was 33. the year-ago quarter, it was 34. so the core business of people using google, searching for things, clicking on ads is actually slowing. >> is this just the law of big numbers, though? >> well, i mean, google is doing $50 billion a quarter in revenue and is kind of hitting this sort of inflection point, slowing growth. apple hit that same inflection point at $150 billion in growth. so to a certain extent, it is a -- a law of large numbers. but the thing is, this is a tech company. and i think this is an overall problem for tech is that growth in tech is slowing. as tech becomes a bigger part of the economy, it's not growing as fast as it used to. jordan's take -- and, you know, i asked him what to watch for. his take was that as a --
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becomes a mobile search more than a -- i guess a search p.c., that it's only, what, 20% now. cheaper mobile. once you get to the point where mobile becomes a bigger part, that then it can start growing again. what -- did it hit that inflection point yet where mobile has become bigger enough to start adding to growth? >> if you go back, actually, like two years ago, growth had slowed. it was in the high teens, 18%, 19%. then as mobile started to take off, you have in this country close to 60% penetration of smartphones to major carriers. now you can search. before you had to wait until you got to your office -- >> do you make less money on a mobile snerch. >> you do. but again, you take out pricing and look at the core people using that. growth actually accelerated. you had in 2011, you know, up 40%. now, what's happening is that desktops are -- google doesn't break this out, but if you back into the numbers, 20% of the search being mobile, you see desktops is slowing.
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according to comscore, it was actually declined in the u.s. down 5% year over year in the fourth year. >> can mobile take that baton eventually? >> well, it had been, but now it's not. in other words, that growth in mobile is no longer accelerating overall growth. the net result -- >> is that the industry or just a google-specific problem? >> i mean, how many more times do you need to search? that kind of brings me to my second point that i think is an issue for google. the cost of doing that has risen dramatically. forget motorola, core google operating margins declined 408 basis points year over year. everything they do from gmail to maps to actually having to create the android operating system merely to ensure that you use google for search, is increasing the cost of being google. so there's only so many time you need to do that. as costs go up, growth is slowing, and they're really not
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monetizing all those things. it's really just feeding into using search. >> you don't sound that positive. >> no. >> jordan's point was at 700 it probably goes back and tests highs near the high sevens. maybe it turns back down. it's almost going to test -- >> you know, the fun thing about google is they've never had, even as they've become the new monopolists in search, they've taken over mobile. they've never traded at a crazy multiple like an amazon. google has historically traded at close to one times growth. right now, earnings growth for this past year was 12%. this year we think it's 15%. stocks trading at 15 times earnings. trading at one times growth. >> yeah. all right. does it get through to new highs, or does it turn back down once it gets to the -- >> i funding we see some inflection point where growth is accelerating again -- >> yeah. >> absolutely. >> ever pay a dividend? >> well, i think like all of big cap tech -- >> a bad -- >> they'll have to do that.
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what they've been doing so far is investing in technology. they built android. they bought motorola almost entirely to protect android. it was the largest defensive move ever. so that's where they've been spending. but clearly they generated $3.7 billion in cash in the quarter. they could afford dividend. >> have you picked up anything evil that they've started doing, or still doing no evil? have you noticed anything? >> nthey sell ads, google is an ad company. that's all they do. and we love ads. >> thank you. that is not evil. >> right. exactly. they're doing no evil. they're serving the common good by serving up ads that are relevant to you like facebook. >> okay. >> dan, thank you. been great talking to you. >> no evil. when we come back, research in motion takes a first step toward blackberry 10. we'll ask what it means for shares. speaking of technology, check out shares of ibm. joe's been talking about this. getting a boost. revenue beating the street.
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204. trade boofing that now. by the way, the world's largest technology services company is offering a better than expected 2013 outlook. helping the dow, too. [ wind howls ]
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[ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. u.s. equity futures looking good. again today, nine out of ten sessions, i think. ibm is one of the big gainers,
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helping the dow up about eight points, back above 200 after strong results. making headlines, research in motion releasing a new system to allow its biggest customers to use its new line of blackberry 10 smartphones on their own networks. that move will pave the way for the january 30 launch of what some poem are calling the make or -- some people are calling the make or break device. you see why we've got to think up a name for the remarians or r.i.m. -- >> rimaloonians? >> loud mouths. they're object noux us on. but anyway -- obnoxious, but anyway, it's gone from six to -- >> you getting them on twitter? >> no, i don't pay attention. they think that people care what they say when they don't. they've got like these blogs and -- >> they do care. i do care -- >> all the signs of like i omega or -- >> i do care about my blackberry device. i've been worried about the idea of -- >> my wife tried to use one of
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my kids' iphones. it's gobbledygook. your big fat -- you don't have fat fingers. >> i have teeny fingers, it doesn't work. >> you got to turn it sideways. >> i still turn it sideways and type with my pinky and i still have issues. >> the keyboard is important. >> the qwerty keybard. >> i'm not part of the google mobile search revolution because i search and it says google app -- >> i'll teach you. yeah. >> i use it for emails, that's the only thing it works for. >> all right. let's get to the broader markets. scott barrow of trading advantage joins us from the cme. we've been looking at the numbers. the dow has closed up eight out of the last ten sessions. it's fight higher based on everything from the tech companies last night. ibm, a big beat on the street. is this -- does this come as a surprise? did you expect the markets to cake off like this? >> i did expect to see better earnings. guidance hit from last year was so low, expectations were not really very high. i did expect to see good
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earnings. but the market just continuing on like this, that's -- i would tell you what traders are really scratching their head about. when you look at the vix and what volatility is doing also, everybody's scratching their heads. and now with the possibility of having the debt ceiling extension out to may, what you're going to see now is traders and other people that have positioned themselves to sell short-term volatility and buy it out to march. especially in the vix. now that's going to get rolled out to april, to may. you'll see this continued complacency. and when i say complacency, i don't think that's a bad thing. but the continued complacency in kind of this area of low volatility. that's just going to get extended out now. we get a couple more big earnings or good earnings surprises. and say apple comes out today with -- with some good guidance, we could see the vix call to the 11 handle which is really -- that's almost unprecedented.
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>> continued complacency, but the news of earnings is pushing forward? you can't fight the trend? >> no, you can't. what i'm seeing is traders especially that have wanted to be short or traders that have been buying, you know, upside calls in the vix, they're almost ready to throw in the towel. it's almost -- i don't. to say a capitulation, but guys down here are really just saying, all right, i can't fights it anymore. let's go. that may be the time to signal some sort of caution, frankly. if you take the contrarian type of outlook on it. >> right. >> but you can't fight the trend. >> all right. scott, thank you. >> thanks. coming up, check out the shares of biopharma aegerion. details on the company's big hopes of growth.
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welcome back. joining us, aegerion ceo mark bier. congrats on the first -- juxtapin, for a rare form of extremely high bad cholesterol. and it -- sounds hideous. what does it stand for? hofh, is there a word for that? >> yeah, it's a fancy name, homozygous hyper cholesterol anemia -- >> a horrible disease. disease. die at 30. start having strokes and heart attacks. they can have an incident as early as 10-years-old. >> they can.
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8 to 10. >> what's interesting, a couple of things. one, a lot of times it's a tenuous link between bad cholesterol and heart attacks and stroke. and this disease shows you that that can be. again, it's the inherent issues more necessarily than your diet sometimes. >> it is. the majority of cholesterol is produced inside our body -- >> we want it and need it. >> we want it and need it. unfortunately, these kids are born with a defect in their liver. cholesterol's a challenge in the liver. and there's a receptor, a light switch that the statins are a broad platform of therapeutics. >> everyone knows about -- >> everyone knows about. have been treating them effectively. >> lipitor -- >> lipitor and others. these kids have a genetic defect that knocks out the light switch. can't turn it off. the cholesterol they eat goes to the periphery. and this drug works in a unique way. it shunts the dietary uptake. it literally stops a transfer
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protein from turning vldl into ldl and stops the dietary uptake of bad cholesterol into the periphery. >> for these kids. okay. it's an orphan drug. how many people does it affect in the united states? >> you know, with all the rare diseases, we don't know exactly how many patients are out there until we have an effective therapy that comes to the market. we studied it carefully in the last two years. and we think that there's about 3,000 patients in the u.s. and 3,000 in europe. and probably the same number in the other countries. >> does it -- >> is there a broader use? >> does it open a pathway for -- >> you know, there is a potential broader use for this product. but you know, the product was originally being developed and thought of as a replacement for the statins. but if you eat a normal diet, it gives you diarrhea. but these genetically impaired patients, they eat a low-fat diet. they don't experience the same diarrhea that the broad population. so if you're on -- if you're on an effective diet, this product brings your cholesterol down rapidly, effectively, and
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safely. >> does it work -- do the statins in lipitor and mevacor, do they work on a different switch or same switch? >> they work on the switch. these patients don't have the switch. so most of the drugs that are switch. most of the drugs on the market and even those in development are trying to more effectively go in and stimulate that ldl receptor that will stimulate the body to eat up the bad cholesterol. these kids don't have that switch. >> how do you even know it? is it evident early on? >> that's a good question. observe these rare diseases don't go unnoticed. when my kids went to the pediatrician, i often wondered why they were looking at their fingers. they are fatty deposits in the joint and the minute they do that they find out the cholesterol away off the charts. >> it is very visible. >> it is.
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on all the joints. we have given guidance this year with 25 million and exit the year with 30 patients on therapy and put us at a run rate of 75, 80 million in 2014. >> when will you make a profit? >> we'll break through by the end of '14. we're very focused on it. cash companies don't always do that. i think it's healthy. >> how many other are in development? >> this is the only product today. we have multiple indications going forward. >> what are the indications? >> the patient we're indicating now is a homozi gat patient and the other type homeozygate patient. >> keep us updated and good luck
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with this drug. >> there are companies that have made their fortune dealing with rare diseases, orphan drugs. what's the one in massachusetts? sn>> genzyme. >> that's where i came from and learned the value of really extending life. these patients, there's nothing wrong with them other than a lethal level of bad cholesterol in their bloodstream. my hope is to help these kids meet their grandkids. >> thank you. >> thanks joe and becky. still to come an "squawk," ceo jim rohr. and former tennessee governor phil bredesen and ceo michael ward. stick around.
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the watchdogs of wall street. meet the whilst blower who helped the sec blow the lid off a multi-million ponzi scheme. >> were you scared? >> i was, i was terrified. >> today at 11:00 a.m. eastern cnbc. when we come back, policymakers and csc michael ward. and we are welcoming pnc financial chairman and ceo, jim rohr. he's our guest host today. good to see you. great. we'll be right back. ♪
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[ construction sounds ] ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪
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nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
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fixing the debt threat. >> where's all the money? >> that's as good as money, sir. those are ious. and senator pat toomey and a others here to talking about how to get out of the debt threat of america. davos and the second hour of "squawk box" begins right now. >> good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick with joe kernen. andrew is in davos covering the
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world economic forum. we'll check with him very quick. let's look at this stock, united tech. the revenue looks a little ligh light. >> they're looking for $16.6 billion and the number, 16.fo$1 billion. >> almost in line. >> close enough for government work, right? ani fiscal 2000 sales at $64 billion for the company and 6.04 for 2013. that is exactly where the estimate is right now for the guidance. >> the company's ceo saying they closed the year better than they had been anticipating. they also talk about strong cash generation in the quarter and said they delivered on their
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commitment to pay down about a third of the goodrich acquisition debt. keep an eye on that. otis elevator, the equipment, up 12% over a year ago and now saying for 2013 they expect earnings per share of 5.85 to $6.15. the full year -- >> $6.04. they did it for us here, they reaffirmed. we don't know whether they already affirmed at once. do you have that? >> the doesn't like the reaffirming. >> i'm fine with it. >> if they affirmed the number and reaffirmed the number. if they're only giving it once they're not reaffirming it, only affirming it. >> i'm sure you have somebody to check that. >> is it the exact same thing or opposite. is this you reading or me? >> you do that. we have futures.
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they already closed up, eight of them. many of these markets sitting at either five year highs or in the case of the russell 2000, transports sitting at all time highs, really getting pushed higher by good earnings news out there. google shares actually jumping after the company beat estimates with its after the bell report last night. analysts rer encouraged on rebound on online advertising prices but expressing some concern the faster gross is coming in some of google's lower margin business, that stock up by 5% this morning. and ibm earning $5.39 a share for the fourth quarter, 14 cents better than the street was expecting and the stock is up, a big help for the dow. a temporary debt level extension allows the government
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to borrow money for three more months. the white house already said president obama won't stained the way of the bill becoming law if approved by congress. a big story. >> let's get to andrew ross sorkin. i'm using davos. have you heard any say iing daf vose, everyone say iing daf vos. >> daf vose. daf vose. let me show you where we are. this is the roof of the congress center where all the action happens on the roof. this is a heated tunnel, actually how the executives and politicians come through, a big security bubble that begins right over there. already this morning, there has been news made in the congress center, jamie dimon hitting back on regulation, talking about the world of banking and some people here at least calling him defiant. take a listen to this.
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>> i think jpmorgan was not just a fair weather friend, we're there in good times and bad tapes for everybody including nations. for spain and it they'll, we tell you lending $15 billion net collateral, spain and italy and yes, it's governments and multi-nationals, if you want to be transparent. what would you do? what would you all do? if you were my board of directors, easy to say don't take the risk and move out. we've been in spain and italy for 60 years. we're not a fair weather friend. the companies don't want us to be there. we have to manage that risk. something may go wrong. >> we also heard from elliott management, someone we don't hear from often the hedge funds, had comments for dodd-frank and regulation, talking specifically about his view they could accelerate a financial crisis, not keep one from happening.
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take a look at this. >> dodd-frank was passed before the congressional panel issued its findings which it was required to do about the causes of the 2002 financial crisis. they passed this thing without active and aggressive collaboration with other g-20 governments. it contains, in my view, a lot of mischief. >> the other conversation is around david cameron, what he's saying about the urk. by the way, i'm going to walk while doing this. can i set up an up or down vote. this is our techbt here. an up or down vote whether the uk should stay in the eurozone and european union, what that means. joe, you have question whether this is real behind us. this is not a green screen, actually is real. there was a question for joe and
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becky. i was at a cocktail party last night standing next to a hedge fund manager, the person next to me described as moody. the question for the night became who is the least moody billionaire you know and who is the most moody billionaire you know. i leave that for you and becky to try to decide that. >> that was good. i've never seen where you were before. that was worthwhile seeing it. >> he's buying into it now. he believes you might actually be there. >> it's real? >> i don't think the light is so great here. you probably can't see me so well. that makes it good. >> it is real. >> andrew, i see you're still outside the security area. do you have access to the security? >> no. he's actually in, i think. >> i do have access. i am inside the bubble. this is the white badge,
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supposedly coveted white badge. i am allowed in. the more we talk, the more i could change. we'll see. >> we'll check back with you a little bit. i remember a couple years ago, richard branson was on the other side and refused to pay and they wouldn't let him in. we have a lot of coverage coming up from davos throughout the network as well. maria bartiromo there. joining us to talk about the financials is jim rohr, the president and ceo of financial services group. great to have you here. >> thank you. >> we've been talking about the earnings and pushing the markets to high levels. five year high for the dow and s&p 500 as well. people look at the financials and still have questions about what's happening there. last week, you reported earnings. they came in light of what the street was expecting because of a 47 cent charge for the
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mortgage settlement that came through. are we getting to the other side of all these mortgage problems? can we say it's going to be a much better 2013 with more clarity? >> i think so. a lot of the repurchases have been reserved. we don't know if there will be more, if the agencies changed their policies again. we'll see on that. we set aside the reserves we think are adequate for the market. the settlement with the fed and, occ was a very good thing. some years ago there was a look back requirement the last 10 years and look at every individual mortgage and have an outside consultant review everything. basically, that's been settled and put behind us in the fourth quarter. all the major banks signed up for that in the mortgage world and put behind us. some of the uncertainty is behind us, really good.
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cfb put out some regulations, more going forward. we'll have to see. >> what do you think? >> i think the regulations are fairly balanced. the cfpb agency set up with unusual different kind of enforcement abilities through the state ags. they're different and everybody is wondering what it will be like. so far, the relationship with them has been very good and they've been very balanced how to streamline the mortgage business which would be very good. >> aside from that, how are things looking in terms of loans you're making and construction? >> things are better. we saw 2%, 8% annualized for loans and a contra fee item up 11% quarter to quarter. i think our revenue growth was seen as a very positive thing and why we got a positive reaction to earnings.
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i think we will have loan growth. our customer growth last year was the biggest customer growth year we ever had in our history. the most positive thing. very good time like this. lower interest rates, hard for banks and lower economic growth 2% and you will have long growth and some people will diff differentiate themselves a little bit. single digit loan growth. and you tell your customers you will be taking costs out. that's another thing the street really recognized the opportunity for us in '13. >> jamie dimon just made a statement pushing back a little bit saying there's all this anger for banks out there and we serve a real purpose for the economy, not just around the country. i know you're focused on what's happening around the country. do you get the sense banks have gotten a bad name and by the
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way, they perform a vital role? >> the banking industry is key to the economy. it drives the money supply it funds all the growth in the country whether individual's growth for buying a car and funds new business, small business, medium sized businesses, large corporations, facilitate businesses and interest the fulcrum of the economy. the idea that the banks don't operate well is the ruination of the economy. we need strong banks. they're stronger than three or four years ago, capital levels almost double where they were, liquidity extremely strong and the banks are in a much better position than they were and if we keep work our way through the regul regulatory maze, because there's so much regulation, there's a real opportunity. >> you're ready for higher rates? >> everybody is ready for higher
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rates. the saver is ready for higher rates. >> who was it at jp, the analysts saying you can only do this so long the bank can't be in the business it's normally in and get tired of fees. it would be nice to have a yield curve. >> that is without a doubt the next bubble. >> safety bubble. >> think about savers. >> pension plans. >> at some point you have to go long. you go buy the 10 eu-year, rate finally move and lose your entire balance sheet. >> it's like cold weather. i was happy today with 10 degrees. i want this to be the coldest year, so the same -- the day after the speech it's all about climate change, i want it to be the coldest year in the last 50.
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love these guys, csx. they gave guidance in december and in january and replied to us. coming up, tennessee governor and member of the fix the debt campaign. [ male announcer ] you are a business pro. executor of efficiency. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national. because only national lets you choose any car in the aisle...and go. you can even take a full-size or above, and still pay the mid-size price. now this...will work. [ male announcer ] just like you, business pro. just like you. go national. go like a pro.
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one of the biggest points of contention in the ongoing government battle is entitlement reform. you see the stuff we talk about and see the demagoguing on both sides. the democrats saying republicans want to push grandma off a cliff and the republicans saying we will become greece. the real issue is we cannot afford some of these things we promised and we need grownups to rationally decide how to make these programs reliable for the long term. >> that's a pretty discouraging assessment li assessment right there. >> we need grownups. don't you think we need -- >> we have to do something about
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the deficit and amount we're borrowing and the route goes through the social programs. >> the only route. knew can't solve it with these high levels. we had high levels like this before after world war i and it came to and and what's driving it now is the coast of these programs are out of hand. i'm a democrat and think these are good things to have. >> there you go. republicans don't think it's a good thing. >> no. i'm not arguing they ought to be cut back or slashed or makes the nanny state because people have access to medicare. they're so important to the structure of the country we have a moral obligation to make sure they're solid, properly funded, stable, sustainable over the long period and because they're an important part of the way people look at their lives. >> the big change is how people
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look at their lives a decade longer. if we address them now rather than waiting for home to blow up in our faces, these can be put in well in advance rather than waiting. you're not talking about people in these programs right now. >> social security is -- >> an easy fix. >> that's an easy fix. if you took a college course in actuarial science, you can figure out social security. the medical side is a lot tougher. we need to get started on it and not crashing against the wall ten years from now. >> there are people, we had a professor from texas, john kenneth galbraith's son. people put in 100 and take out 400. he said, that's fine and the government needs to make up the difference and we'll tax people to get to the point we can pay for that so we don't need to do anything about it. that sounds counter productive.
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turning it into a defined contribution system, is that even worse? >> first of all, you can't sustain that. >> because productivity will rise in this country so you can cover it? >> it hasn't in the last decade. a lot of assumptions in social security is you have expanding social security and each generation is richer than the previous one. that's not the way it's turning out. >> baby boomer. so there are -- if you take the polar opposites of the sides, there are people that just want to pay for whatever we' we're -- have promised. unfortunately that brings government as percentage of gdp to somewhere around 40% the next 20 years. what should we try to keep that at in your view? >> i don't think it makes any sense to try to, in the abstract, pick a number like 18 or 20 or 21. >> what does growth hurt overall -- growth solves everything for us.
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>> i think it depends. the social insurance programs are a very different animal than the other things you do and spend money in defense. there are direct payments out to individuals. >> the lion's share of the problem? >> the lion's share of the problem. the way people on fix the debt look at it, i don't know whether it ought to be 21 or 22 or 15% n. these change over time. hamilton and jefferson argued about- >> 6%. >> they argued how big government ought to be and that argument won't go away. we can agree whatever they are, you will pay for it. if you have a generous social security benefit, fine, we will have the taxes it takes to support that benefit because you can't just drive the country into this hole it's being driven into now. . >> are you optimistic we do something in the next year or two? >> i'm ful. i thought we lost a big
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opportunity with the fiscal cliff to at least start down the road to putting some of these things on the table. it clearly -- the agenda is out there in i think the next three or four months, there's going to be a lot of discussion of it. it's difficult stuff. frankly, both parties. i belong to one of them. both parties have dirty hands on this. they've all done things that really drive things in the wrong direction. >> are you native tennessee? >> actually. i grew up in new york state, upstate new york. >> i wondered how you talk so funny coming from there? you like country music? >> yeah. >> what's your favorite? >> i try not over the years to have done that because -- >> you're a politician. all right. nashville is obviously great. anyw anyway, governor, we appreciate it. thanks for what you're doing. please try harder.
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>> you mentioned entitlements, you have a long successful history of health care. obama-care is now part of our legislative process. how do you think that will play out, especially with the debt crisis? >> i think that the cost of the affordable care act is way way underestimated, that you're going to see a lot of movement out of -- excuse me -- you will see a lot of movement out of employee plans, corporations sponsoring plans. >> you could barely get that out, you almost started coughing and choking how much it will cost. >> it's been made so attractive to do through these exchanges, i think you will see that kind of move. >> it could be baby steps to single payer, which is what some people think was the whole conspiracy theory from the start. you're nodding as a democrat. scared. governor, thank you. >> thanks.
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when we come back, csx is getting a boost in after-hours trading after reporting better than expected results. slumping coal demand is hurting the bottom line. the ceo is a few minutes away. andrew in davos with the rich and famous. what does it take to get to such a high profile event? andrew's exciting journey and what you need to know for a trip to davos just ahead. time for today's aflac trivia question. which u.s. president gave the longest inaugural address in history? the answer when skrcnbc "squawk box" continues. but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries?
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aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com. [ male announcer ] when we built the cadillac ats from the ground up to be the world's best sport sedan... ♪ ...people noticed. ♪ the all-new cadillac ats --
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now the answer to today's aflac trivia question. which president gave the longest inaugural address in history? the answer is william henry harrison. 105 minutes long. >> we update the cold weather to 11 in new york, the windchill
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about zero. northern maine, 30 to zero and 18 below zero without the chill and temperatures running below average, 15 to 20 degrees in spots with that northwest wind. still snow around the lakes. 22 this afternoon, average highs 38, we climb just above zero in burlington, vermont. down south, sunny, cold yesterday. things are beginning to moderate as cold high pulls away and you have higher sun angle. warmer weather come back in texas. 75, dallas, 76, houston. it is frigid cold in the upper midwest but not as cold as a couple days ago, stayed below zero and 5 degrees below average at 25 in chicago and starting to see moderation with the next storm.
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predicting snow late to the midwest friday and saturday morning in the northeast. looks like primarily a light snowfall. 1-3 inches or so. boston, the coastal area may get 4-5 inches. we'll keep you updated on the weather channel. more from "squawk box" and davos. stay with us. coming up, the little engine that could. the ceo of csx chugs into town and talks earnings and history of the economy. an view you can't afford to miss, right here only on "squawk box." if this is america.
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welcome back, everybody. in our headlines on "squawk box". reporting a profit better than the street expect ed, and just short of the forecast, we're correct they said that, affirmed in january for united technologies. and now they are reaffirming at this point. >> the company is playing along.
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i know. >> let's check out shares of coach under pressure this morning after the luxury goods-maker reported $1.23 a share for profit and 5 cents below what was expecting and revenue falling below wall street consensus and the ceo says holiday season sales were disappointing. that stock is down 12%. remember, we talked last week wi about tiffany and said there were lower end items that cost them and wonder if that's the same situation with coach. >> wonder if that's a bigger one. you never know with designers and inventory, what works and doesn't. you can never extrapolate, you would think luxury goods. >> with coach and tiffany, that has to spell trouble for luxury. mortgage applications rose 7% last week. it was driven largely in a jump
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in refinancing application, driving the whole boom in the mortgage market. dow transport, the rail giant rose 40 cents a share above expectations, coming in at $2.9 billion, and slumping demand for coal continues to hurt shipments and prices for natural gas and soft economy continue to weigh on the sector. joining us is michael, with the transportation average at all time highs. it's a timely interview for us to have with you. we had a transportation analyst on yesterday and did point out some of the weakness and stuff he's worried about is more based on the trucking sector. thinks rail will continue to do pretty well. is that how you see it. >> yeah. i think very much how we see it, joe. as you mentioned, the coal has
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been under challenge all year long. our coal shipments for the year were down 16%, costing about 0 $500 million of revenue year-over-year. we have a pretty diverse portfolio at csx. we were able to grow our other businesses 6% driven by auto and mobile business and were flat year-over-year and people at csx did what we are best at controlling what we can control. produced our best service this year and best safety record and brought in $200 million of productivity. on flat revenues we increased 7% and our ebitda 7%. we have opportunities to grow that in ter modal business going
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forward. >> we heard the automotive sector is still good but the comparisons won't be so easy because last year was huge and not up as much this year. can you count on automotive helping you out-perform? >> not as much as this year as you were correct to point out. it was 13.million in '11 and went up to 13.3 in '12 and expecting 13.6 next year. it will not be as much as last year. we think intermodal will be strong, grew about 7% last year and we think the coal will abate some. we were down 6% last year and don't expect it in the coal business, but expect some in natural gas. >> it did point to trouble iing volume issues that might have
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been pointing to bigger issues on the economy. we've been told europe is on the back burner and china is recovering and we have positive hopes for the u.s. economy. do you see any softness in the overall economy or feel pretty good about 2013? >> we do see some slowing, you're correct. if we eliminate coal and look at our other business, we were up 4% in the second quarter and same in the third and only abup about half a percent in the fourth quarter. our anticipation is we will see slow steady growth going forward. there's no reason and we might see pickup in the second half if some of the fiscal issues in d.c. are dealt with properly but our best guess is slow steady growth. >> are you talking volume or revenue numbers? >> on the volume -- last year, we were able to exceed gdp.
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that grew about 2%. we grew about 3.6%. we think we can exceed gdp or idp this year we anticipate is about a 2% growth economy in the coming year. that would be car loads. that would be car load, becky. we think we can continue to get above rail inflation pricing, as we did last year, so the reve e revenues behave better than the car loads do. knew had a great year on safety last year, michael. congratulations on that. probably not a lot of opportunity. do you have a lot of opportunity on productivity or cost set? >> we do, jim. thank you for that complement. we came out with an outstanding safety year and our people really focused and glad to get our employees back home to their families safely every day. we're targeting another $130 million productivity this year, continuing to drive the productivity and trying to better that all time best safety record last year.
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>> slow, steady growth. i've had people writing in recently that all the ceos, you know, seem to be satisfied by saying, we'll just plod along with slow steady growth. why are you satisfied with a country capable of growing at 4 or 5%, growing at 2 or less? >> joe, i didn't think i was satisfied. >> i know. are you angry? the gentleman that wrote in, former governor said it's a national disgrea greasgrace and the future for our citizens we're happy with 2% and ceos aren't more angry we can't get an economy growing at 3 or 4%? >> i guess i'm a little more optimistic than the former governor. we do have some adults in washington d.c. that will work to correct our issues. as you know, the fix the debt group csx is a participant thinks we need to do something like simpson-bowles, revenue
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increases and discretionary spending and some entitlement reform. it has to be something basically that has something everybody it has if we come to a good solution. >> it should still be about growth and jobs and i didn't hear much about growth and jobs in that speech, did you? >> well, i did not, but what we're going to do is we're going to focus on what we can control and we'll grow faster than the economy does at csx. >> i'm sorry to bring this up. the associated press is just repo reporting 18 cars of a csx freight train have de railed on the city's far west side and says no injuries are reporting on this. is this something you know that's just happening as you're sitting dun ting down. >> if it's just happening as i'm sitting down, i don't know anything about it. >> we're just seeing press details and i don't know if this
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is just happening as we're sitting down. >> just happening. >> the accident caused no injuries. >> that's terrific. >> very good news. >> michael ward, thank you, appreciate your time this morning. the stock looked pretty good in late aftermarket trading. we'll see when it opens today. >> thanks for what you do for children, michael, that's wonderful. >> oh, thank you. >> when we come back, senator pat toomey is going to be talking about the debt ceiling, the economy and the state of the bank, right after this. in the next hour, has apple lost its luster. we will preview the quarterly results and tell you what you can expect from the world's largest company when it reports tonight. we have a very big show live from davos, switzerland. it will be a security edition, if you will, of "squawk box," if they let me back in. tdd# 1-800-345-2550 you should've seen me today.
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>> i always say, why do they have this in davos in the middle of nowhere and feels like in the middle of nowhere. the reason is because they want you stuck in this place as long as possible and because it is so hard to get to. as you would say or i would say, take a listen. >> my adventure began at new york's jfk airport monday at 6:20 p.m. >> we are on the flight to zurich, should take about seven hours if everything goes right. you never know who you may run into. after a semi-good night's rest, i landed in zurich tuesday morning. there are a couple of options to get to davos. none are exactly quick. it takes you through different towns i won't even try to pr pronoun pronounce. finally, the center of the economic universe, at least one
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week a year, in davos. we're here. now, it's time get to work. we need to get through what's known as the bubble. we're here inside the bubble. the security bubble, that is. there are thousands of members of the police, swiss army, all here to protect the global elite. biggest names in politics and business. what's your ticket to get into this exclusive club, your passport? we're officially registered with the white badge and hot chocolate and the swag bag. what is in it? most important thing, cleats for your shoes. there you have it. my little adventure here todaf -- davos. i have to tell you the most exciting adventure was the flight over. it wasn't a private flight. i have to tell you flights up
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20%. they had 250 planes landed in europe related to the world economic forum and will probably double today. an issue people are talking about, green and climate change, hello. on my flight, there was a woman who i have to tell you, was a look alike for ang ga-angela merkel. people were staring at her. she was doing the "new york times" crossword puzzle. i tried to take a picture of her a couple times. she had a guy next to her a bodyguard. it wasn't her but it made the flight more exciting than it would. i slept and steve liesman apparently doesn't sleep on planes. >> how do you know she was saying, no, it's not me. it's not me. a bodyguard? >> she was fake iing an accent. >> she had the accent.
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>> faking. the trick is you can't get there from here, davos. right? >> it's a little complicated. the better way is take the private plane and land in zurich, take the helicopter, about four grand. that has the way the real folks do it. >> is that the "squawk box" helicopter in the back, behind you? >> oh, my god. coming in. >> we'll get you a helicopter. we'll get you a helicopter. >> we have a lot more to come an talk to you at the top of the hour. when we come back, we'll go inside the golden afternoons. what would ronald mcdonald say about the start of business. reaction to numbers as soon as they hit the tape.
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davos myome. there. i said it. they don't have pictures of my kids. they don't have my yoga mat. and still, i feel at home. could it be the flat screen tv? the not so mini fridge? ♪ the different free dinner almost every weeknight? or maybe, it's all of the above. and all the rest. am i home? nope. but it almost feels that way. homewood suites by hilton. be at home. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade.
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welcome back, everybody. the house is expected to vote on extending the debt ceiling. there is a new plan the house will take up which would say no one in the house of congress that doesn't pass a budget should get paid after i believe may 19th or something. is that a plan that would also pass in the senate? >> it might, becky. i've got give the house credit for focusing on the real underlying cause of all this government by cliff we've been living through,s which the fact that the senate doesn't
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function. senator reed chooses not to do a budget resolution for three consecutive years, we did no appropriation bills, no bill to address the debt ceiling and the consequence of this is we end up at midnight on december 31st with a gun to our head trying to get something done at the last minute nobody's had a chance to look at. what the house is saying is, it's about time the senate actually did what any law requires, which is pass a budget. and begin the process of setting the parameters for how we will solve this problem and live within our means and how we will eventually get on a sustainable fiscal path i hope will happen sooner than later. give the house credit to put on pressure and if it suspends pay to get the senate colleagues to do what they should be doing anyway, so be it. let's get a budget. >> it just moves the ball down the field once again, in terms of when we will be dealing with these issues, we keep thinking it's sequestration, we keep
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thinking it's the next time arou around. all these supposed deadlines move down the field and haven't been dealt with. what makes people think they will deal with it. >> this is passing the house and then the senate. i would hope senator reed would go through the ordinary process of having the senate pass a bill and let's put it on the floor and pass amendments. i would like to have offsetting spending cuts. we did this last time. president obama agreed to dollar for dollar spending cuts for every dollar the debt cell was raised. it's 22 times we have used the debt ceiling to reinact really substantial reforms. we need those reforms more than ever. the,000 is taking the first step. i hope the senate will do its work and i will push to off-set some of this. >> you don't have a problem with using the debt ceiling as a
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means to negotiate this. >> i don't. this president won't agree voluntarily to cut a dime of spending and thinks we need more spending, not less. the only time we were able to get him to agree with spending reductions was the last time we were arguing over the debt limit. it's not optimal, not my first choice. i think we have to use whatever tools are available to us. we are on an unsustainable path. the overspending is costing us economic growth and costing us jobs. >> do republicans need a new pr firm or something? if you ask any on the street, why don't we have a budget and what's the problem in washington? nobody says harry reid. do people know that has the way he's running the senate right now? i mean, it's a waw -- >> i know it. heard republicans say it. when people listen, it sounds like angry republicans. you guys need a new pr department or something. >> here's what i think happens here. the most prominent job in all of congress is the speaker of the
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house and the speaker of the house is a republican. the republicans pass all kinds of legislation including budget resolutions and bills and sweeping reforms an gets killed in the senate by the democrats who then blame the republicans for not doing anything. unfortunately, it's nworked wel for them. maybe we do need pr. this is a step in the right direction driving this message. i want to offset the tdebt increase with spending cuts but are putting a spotlight on the spending problem. >> they have media enablers almost. we are almost at 8% unemployment and growing below plan for the fifth straight year, more than that, probably and growth solves everything and jobs solve everything, you get more tax revenues. there's people that still can't work and all we're talking about is empathy for people in need or climate change or what was the other -- where's the -- where's
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growth and jobs and a vibrant economy? >> it's not on the priority list, joe. listen jobs what the president did, started off by talking about how we're all really collectivists, not individual, and went through the liberal litany of big government and expansion of government he advocates for. >> the media, i watched it on the "nightly news," it was very lincolnesque. >> i know it was. i sat there, an extremely uninspiring speech. we have to focus on growth and part of getting the economy growing again is focus on a sustainable fiscal path. we won't have growth as long as markets are joined in we will have overtaxing and overspending. >> thank you for your leadership. do you think there's any change coming in the senate in terms of the different views of the fiscal situations? >> i hope so.
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every republican colleague of mine understands the importance of this. i know there are a lot of democrats that do as well. i was hoping after the election we could put politics aside for five or 10 minutes and actually deal with policy. i haven't given up. >> thanks for joining us today. sorry to do but we have earnings numbers coming up from mcdonald's. >> stick around.
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this hour on "squawk box," we're reporting tech, apple and what to expect and the ceo of micro-devices, its most recent quarter and chip revenue the top 10 disrupters and a company that can protect the information on your mobile device no matter where it is. the third hour of "squawk box" begins right now. welcome back, everybody. mcdonald's is out with earnings coming out with numbers much better than had been suspected. $1.38 versus the $1.33 the
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street had been expecting. global comps up 1% for the quarter and talking about guidance and the company says they're sticking with average long term targets in terms of constant currency. system-wide sales, growth of 3-5%, operating income growth, 6-7% and return of invested capital in the high teens and believe these numbers remain sustainable for their company at this point. take a look at mcdonald's stock, indicated up by about .6 of a percent and wonder if that will be helping the dow today getting big gains from ibm. >> it should add to what ibm is doing and united technologies also reported this morning. united technologies reported $1.04, a penny ahead of estimates and revenue on that stock is up a little. i haven't seen the futures lately. they were up about 35 points or so. take a look at the shares of
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coach. the luxury goods-maker reported fiscal second quarter profits 1.23, 5% below expectations and revenue tell short of wall street consensus. the ceo, lou franked for said, among other things, holiday season sales were disappointing. that doesn't tell us very much. >> the question, remember, we had susan from guilt.com, talking about the high end and says maybe people are misunderstanding the problems in luxury right now. she doesn't think they're as pervasive as if you looked at tiffany and said some of tiffany's problems are silver items that really bring -- their cheapest item this is a really had trouble with. i wonder if coach is in a similar position because they do have lower end items ta they can use to bring people in. i don't know what the problems are with coach, i'll have to read through the release and she said maybe there aren't as much of a problem with luxury items
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beaut look at coach and tiffany, that has to lead to questions. >> we went to break and i have a problem with -- >> i used the phrase moving the ball down needle. you caught me. i was using it because -- >> instead of kicking the can down the road. >> right. >> kicking the can down the road. no one cares if the can gets kicked down the road. moving the ball down the field, that's getting first down, progress, getting close to the end zone where you score. >> i can't argue with it. i hate saying kicking the can down the road. >> we have to think of something else because moving the ball down the field. >> why don't you take the gloves off. >> no. i'm trying to help. we need to go back to kicking the can. there was a good one, where the snow bball rolling down the hil. >> it will squish you. >> and get bigger and bigger and growing picking up snow and skiers. snow that may not be his but he
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may be stealing a someone as well as. >> he does looking around corners- >> i can't say it. >> let's do kicking the can. its 's so effective. it's exactly what you're trying to say and you need to use it and worry about it. >> "squawk"apedi a, please give us answers. >> hey, we're moving the ball down the field. congress is not moving the ball down the field. washington is not moving the ball down the field. >> kicking the can. >> they're getting sacked with a 12 yard loss every play. >> two points and get sacked in the end zone. bad enough you're good. so bad you're good. >> it's the oblong ball, not the round one. >> i'm learning a little bit. let's take a look at the markets because we have been watching the futures with the
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dow reporting. they're close to 40 points. s&p futures down by less than a point all coming after massive gains. s&p has been up five days in a row. dow has been up eight of the last nine sessions has a lot of people starting to a scratch their heads. dow and s&p are sitting at five year highs. russell 2000 and dow transports are sitting at all time high, all building off what we're hearing from these earnings. you're getting more this morning. mcdonald's is one example, just reporting. what do you have? >> doug cass, doug sends a lot of stuff in. this is worth mentioning. don thompson concluded at the end of this release, for the near term, wex suspect t expect bottom line growth pressured with global comp sales to be negative. that can be -- >> the bid just fell below. >> uh-oh.
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that could mean it was really good last january. so to be down just means it wasn't as a good as last january. negative comps aren't something you normally see. now 92.68 instead of $92.98. it's now down and had been called higher. >> the global comp estimate, the street was looking for 0.2% for global comps. >> they're flat anyway. they're looking for flat. >> and ellairian -- i was almost nice for a second but then i was mocking. >> par for the course. he's not in davos? >> i don't know where he is. he's up, even in california, it would be 5:00 a.m. >> a great great viewer. we appreciate it. >> and great guest as well. >> and buy their products from
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our sponsors. to get news from davos. the uk minister prime minister is expecting to give britain a straight choice whether to stay in the european union or leave and not until 2015 assuming he wins re-election. his promise after prodding by members of his party was that he would renegotiate terms for their belonging to the e uru an put that to a vote from the voters. andrew is in davos at the world economic forum. a lot of news coming from the bigwigs there. >> on the david cameron story, that has become the story this morning. he made those comments in london. he comes to davos tomorrow where he will be speaking. so many british executives of these uk institutions suggesting simply by having this up or down vote and two years out, 2017,
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will cast a huge cloud over the business environment in the uk and perhaps across europe. big questions what that means. both the europe and uk quite frustrated except for france. there was a comment by one of the ministers of france that said they would roll the red carpet out today for the uk to leave the eurozone. to each his own. joe making a comment about mohammad ellairian not being in davos. he is not somebody who is usually here. had a protest vote about coming. that's where mohammad is this morning, i imagine in california. i want to talk about jamie dimon this morning, on the show. he did talk during the day on the panel about the london whale. commented about it before and colding again. take a listen to this. >> jpmorgan chase since 2008 lent or raised $7 trillion plus for people all around the world,
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including governments, schools, cities, hospitals, small business, large. that's our job. we try to do it very well. the whale mistake you had up there, i want to point out, no customers. terrible mistake. if you're a shareholder, i apologize deeply. we did have record results and life goes on. >> talking about some other people here making news throughout the week, let me go through the list of big names. angela merkel, we will hear from her later today. david cameron, we will hear from him tomorrow. mario monty is also here,also-m here and roy blankfein on our program on "squawk" on friday and talk to him about his views going on and mike corbit from citigroup is also here. among the hedge fund managers here. dan lobe is a regular and paul
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singer we talked in the last hour from elliott management. one that might surprise you. steve cohen, amid this big investigation on insider trading is in davos. a number of people have seen him walking around saying hello to people. i don't know if he's talking about the investigation. at a time you might think he would hide, he is out and about. a lot of people talking about who is not here almost sometimes as important as who is on the list. among those who are not coming this year, some big questions about what this means, what it says about davos. the whole google contingent, they used to throw a huge party friday nights the past several years, they opted out completely. what does that mean? bill clinton a regular is not here. and jim bryan and while we're on the air j. they're interviewing
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derek jeter of all things. i don't know if you can think of derek jeter as a guy at davos. they did lunch together and tina brown tweeting up a storm was actually about lance armstrong. derek said he should have admitted his mistake and moved on but that he fooled everyone, including me, i know, joe, you weren't that fooled. that's what's been going on in davos. we will have more throughout the day and the week. >> you told me -- 3 million people watched. it wasn't even and oprah record. you said everybody in the world was watching that, not true. thought they were. >> he does not go -- >> i was the one that went to watch him win. what do i know? >> ellairian belongs there. he is so davos. walking around there, someone asks him a question, one of his answer, he deserves to be there but he doesn't go. i don't understand.
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>> he should be. it's a long trip. he likes to fly coach. >> he's in newport beach. why leave newport beach, a good point. >> i'm pretty much with you. >> but you're there. thank thanks. >> we'll check back from andrew. joining us to talk about the tech titan's numbers is ben, and i know you've been predicting this was a downturn, inflection point for the shares of apple. is there anything you could hear on the conference call tonight that makes you think maybe it's time for the stock to turn back the other direction? >> we'd love to hear grandson margins are okay. -- hear gross margins are okay. and not to the down side. there have been those that rerate margins way down and shows it's the end. if apple can say gross margins
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can get back to 40ish type levels, i think investor confidence can come back to the to stock. >> isn't that a difficult situation when they've been looking at moving into lower end, bringing in new consumers who hadn't been able to afford their price points in the past, you don't like that strategy? >> i do like that strategy a lot. i think with the ipod, they did a shuffle and nano and mini. they went after it in the ipod. i feel all along they should have done that with the phone. samsung is for real and other carri carriers that dictate a lot of demand trends. i like the strategy. i think they can gain margin through scale and sell a lot of accessories and services through that. that's a little hard to stole my investors and my clients sometimes. i think that the ipod way, they went after it and they didn't let anybody do anything in that music player market. i actually think that's the way to go in phones.
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now that we've passed that time, they need to be a little careful. they can do a phone with a 40% margin, below the current but not below others. >> and some people anticipated in part they sold so many of the iphone 5 more than expected. is that good news for apple? >> it's a mixed news. actually, i think the big news of verizon, they sold more iphones than expected but sold more old iphones. half were iphone 4s and 4 ss. those actually carry a higher margin than iphone 5. the gross margin may be surprising given the mix of old iphones was stronger than expected and i expect it continues. what's going on with the iphone 5? is it a hit or do they need to pull pull up production of 5 s
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to stimulate demand and accelerate the cycle. >> thanks for joining us. we'll watch the results tonight. next, men llow ventures and we'll talk to the manager. mcdonald's reported a few minutes ago. we'll go through the report including everything positive including what we saw on january global comp stores they will be down this year. this is america.
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right now, a venture capital view of the top 10 disrupters. from the firm menlo ventures and on the board of several silicon valley start-ups, including tumbler and zoober. is zoober the taxicab one?
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>> it started with black cars and you can push a number on your mobile phone and it will come right to you. >> sorkin should be doing it even though he's in davos. what is developer auction? ebay? >> it's a reverse auction basically around talent. they just launched as the founder of 99 things. 99 designs. their first auction was -- there was $80 million of offers from companies to the actual developers. it's all technical developers. they put themselves on developer auction and get offers, binding offers from companies. the first one shocked me. it was $80 million of offers. that's a very exciting one. >> poshmark? >> it is in the space of collaborative consumption, oober
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is in as well and get around as well. the idea is women have lots of extra clothes. i'm sure your wife buys clothes, wears it once, never wears it again, just like mine. the idea is, well, all that excess capacity in the closet they're put going it on the poshmark app. this is taking off. snow buys used clothes. >> exactly. they're buying shoes, purchases, a huge marketplace growing faster than anything i've seen in that space. >> get around? >> it is exactly in that space as well. people are rent their cars to other people. i've made it that theme of dlabtidlab tidlab -- collaborative consumption. can rent my car sitting in the driveway. isn't there insurance that goes with that? >> no. warren buffet loved this model
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so much he created insurance for it. i put two of my cars on there making $2,000 a month. >> oober, we talked about. what's black jet? sn>> eeoober for private jets. for a first class ticket price, you buy a seat on the black jet. >> how about fab? >> fab is in new york city, one of the fastest growing companies in e-commerce i call it social commerce, beautifully designed products they sell. the new amazon in 2.0. they're now massive. they weren't even around two years ago. >> what do they sell? >> everything, furniture, airport, any kind of beautiful design products every single day. >> new products or used? >> new. >> warby parker. >> they create beautifully
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desi designed prescription glasses and sell it for 99 bucks, with the prescription. they're saying in the market these designer glasses are selling for 5, $600. they're dropping it and buying online. >> i saw 60 minutes. pintere pinterest. >> pinterest is really growing especially among the women female demographic. they're pinning the things they like, any kind of products or ideas that they are -- they want to collect, they're basically putting it on there. that has grown incredibly fast in the last year, year and half. >> we can't finish. machine zone and smart things. those were 9 and 10. >> those are 9 and 10. >> i like -- i kind of like this. i understand some of the stuff you're saying. we need sorkin. he's probably used all of these. >> probably has. >> maybe you will come back. you're loaded because you already had all these start-ups,
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right? you're flying around on one of your black jets? >> we immigrated to this country with nothing. my dad drove a taxi in d.c. i was just at the inauguration. what an incredible company. entrepreneurship is what keeps it alive. >> well- >> thank you. >> nice to see you. >> nice to see you. >> when we come back, the "squawk box" ceo is in session. that protects your smartphone from software intrusion and theft. then the ceo of rf micro-devices. the company makes chips for devices like mobile phones and cable modems. "squawk box" will be right back.
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welcome back to "squawk box," everyone. in our headlines, the number of people applying for mortgages rising for the third week in a row. increased demand for financing is the catalyst. we've been watching the dow components including mcdonald and utx. we will have more on those stories when we return. the dow is still indicated to open higher about 35 points above fair value. when we come back, we're live from davos once again. the tech disrupter that protects your identity by protecting your information on your smartphone. andrew joins us with the ceo of lookout. right now, dow futures up about 34 points above fair value, more on earnings when "squawk bo" co
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right back.
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welcome back to "squawk box." let's get back to davos. andrew sorkin is live there. we were just saying we wished you were here for this last interview. >> i listened to it. it was fascinating. we have a disrupter here today, another disrup tore on the show. john hairing. basically a semantic of mobile phones. is that the best way to say it? >> one way to say it. our goal is to be a global company and the shifts and threats are different. >> first, how old are you? you look very young. >> 29 years old. >> you raised how much money? sn>> $75 million. >> you are trying to get us to the next big threat. >> it's the center point of your life and knows more about you than any. have an iphone and blackberry. others have androids.
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are there a lot of viruses going around already? >> what we found is that it depends on the platform. there are attacks grow iing especially more advanced pla platforms and are security threats that have emerged. >> is this a regular update i have to subscribe to this? >> we use big data to solve security problems by leveraging the collective intelligence of all the users of our service, 30 million around the world. >> how did you come up with this idea? >> we started at the university of southern california as college and security researchers and found security and vulnerable researchers hangeded phones. >> you hacked phones? could you hack my phone? >> with time. >> what would you do? >> especially at davos, you have high profile individuals, a targeted attack that allows you to take complete control of it that allows you to pull any
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information you want remotely. >> that's happening? >> it can. >> the chinese, are they doing it? you hear of different people hacking these things? do you think executives at davos, their phones -- >> i think there's significant risk, especially people in this government or elevated positions. when you have a device or locations that knows your identity of any given time, security is an issue. >> the craziest thing i saw your software does, if my phone is running out of battery, and, you know, let's say i lose my phone, leave it somewhere, that you can still find it even if the battery is gone? >> what we found is security threats are broad and lost and stolen devices are an important issue. >> apple has done that and have a feature and i can usually find my phone but the battery has to be okay. >> and we have created signal flare as soon as the battery
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starts to drain it kicks off a location to lets you know the last known location when any battery dies and when ythen it phoning home so you can locate it. >> amazing. on top of a blackberry? >> it's mostly for iphones and blackberry? >> will you support it for blackberry? >> blackberry is a software we won't be supporting in the future. >> does that mean you have already written it off? >> the future is andros and iphones. >> all right. take that to the bank. >> thank you. check back in a little bit as well. we do have headlines coming up this morning, earnings. >> we're in the middle of earning season. here is something we've seen already. mcdonald's a profit of $1.38, five cents above estimates. the academcompany expects same-
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sales in january but analysts looking for a slight increase up 2.4% and the environment remains challenging the way the ceo would refer it to at this point. >> changing the menu. >> stock is back up and looks pretty good. coach shares are a big feature today. down 10 points almost. the luxury goods-maker missing estimates with the fourth quarter. revenue also short. hurt by the slow economy. this is the key, discounting by rival that cost their handbag business they're talking about, really stiff competition. now more from our guest host, jim rohr. i sxwrd peopasked people in the loaded question to some extent. you were involved in the mortgage settlement. banks need to be very careful how mortgages are arranged. in general, the malfeasance that
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resulted in these huge settlements, billion s s of dols of settlements, it was basically paperwork and shortcut, right? there were mortgages going in foreclosure. was any ever foreclosed upon that was current on their mortgages? >> i think one of the issues that came out was the initial for ray people looking back wha kind of mortgages -- >> shouldn't have been written or protected people from themselves? >> you go into this subprime department, subprime area, obviously there was a lot of underwriting there, very low down payments -- >> because they offloaded it, secured it, securetized it. >> a wholly different carton of goods. you looked at the basic mortgage business, there was concern people had done a lot of bad things and foreclosed on people
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who weren't in default. from what i know, at least in our case, that just didn't happen. errors that were made in the documentation over time. one of the issues was we wanted to get it behind. >> it like what? >> robo-signing? >> we'll give you an example. in a number of states, you would close on a mortgage with an estimated legal bill. say you estimated it at $1100 for the legal bill and you closed. the bill came in at 1,060 instead of $1100. that was an error. there was an industry practice that would say, if it was within 100 bucks or 80 bucks over or under, we wouldn't go after the other person for the 40 bucks or wouldn't return the $40. that's an error. the industry technically, should
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have returned the $40. i think you go back, there's a whole series of those kinds of issues. technical issues. the beauty of it was that i think the industry, for the most part really didn't foreclose upon people who weren't in default. >> do you think these settlements that were pursued were fair or not? should the government have pursued them and pay the fines? >> i think the government should have pursued them. when we look at the biggest mess the industry was in. we weren't in them but then acquired mortgage city and got us back into it. it was such a mess, i don't think there was any question the government should have required the banks to go back and look to see what took place. i can only speak for our experience. there were errors in the national city process, no question. sweatled those and that's fine. i think what was happening was the government did a good thing,
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they were finding -- you might find a lot of technical errors and we'll deal with that. there really wasn't a great deal of foreclosing on people who didn't pay their bills. >> the bankers need a pr firm, too. just watching the media portrayal of settlements done, they divided $2 billion bay ty number of people affected and say the average homeowner only gets $800 and the bank gets away with it. you would think the everybody was foreclosed upon the individual had no complicity or responsibility in anything that happened. >> that's the way it is today. one of the things talking about the banks, the banks lost an enormous amount of money. >> so did shareholders. >> in the subprime space. >> your shareholders were wiped out. >> the one thing people missed is fannie mae and freddie mac.
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>> that, too. >> drove the bubble and drove a $7 million combined balance sheet and the federal government -- >> you lost that battle. >> we still haven't resolved how we will deal with fannie and freddie in the future. the issue is the future. what is fannie and freddie going to be in the future and what are the mortgage rules going to be in the future? it's such an important lending product we have to get it right. >> you've lost that battle, too. greedy bankers that caused the financial crisis, it was not fannie and freddie, the revisionist history we're left with and the way it's written. >> you can't have that big a mess without having more than one hand in the pot. it was a lot of people that helped cause the crisis. the bankers are part of it. >> are you saying you're not a greedy banker? >> well -- i'm not as greedy as others. >> is that your contention? >> anyway -- >> depends what you mean by greedy. >> more from jim moore still
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ahead. >> when we come back, the ceo of micro-devices, making chip components for cell phones and cable mo-demps coming out with better than expected revenue yesterday after the bell and we'll talk with the ceo.
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today, all eyes on apple and netflix earnings. is branching out building netflix bottom line? today, 4:00 p.m. eastern on cnbc. welcome back, everybody. rf micro-devices manufacturers components for high performance
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semiconductors. the company came in with better than expected earnings and revenue. the ceo joins us to talk a little bit about it. thank you for being here this morning. >> good morning. thank you for having us. >> the stock is up after the company came up with better than expected results? what do you really see happening at this point, specifically when it comes to cell phones and devices we had a lot of questions about? >> as far as the market goes, we saw tremendous growth in the market in the december quarter. it's clear mobile data is what everybody wants, from all walks of life, entry level to the mid-tier to high tier. everybody wants to be connected to their data. >> what cell phones in particular did you find is the best-sellers? >> actually, we saw very broad-based growth in the december quarter. high end smartphones did extremely well with rollout of 4 te 4 g and entry level cell
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phones in the 2-g market as well. >> is that international sales? apple is talking about coming out with lower entry level phone or lot of analysts speculating they should be doing more, talked about that strategy. is that something you see picking up and going around, too, just this idea of demand for these smartphones coming in from international markets? >> absolutely. we're starting to see lt rollout not just in the united states and also in europe and asia will follow. absolutely. the smartphones are growing outside the united states. if you look at the total cell phone market, the united states represents less than 7% of the total market. >> how does that compare to where it's been over the last five or 10 years? >> we've seen tremendous growth outside the united states. in fact, in some asian country, people are carrying multiple phones, not just here in the united states. the big growth in smartphones is
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in china. we expect over 300 million smartphones to be sold in china. to give you a relative comparison, the total phone market in the united states is about 350 million cell phones. >> what is it you do worry about, if things are looking better than expected and growth coming in strong, anything you worry could throw that off track? >> clearly the world economies can impact the rate exchange people grow their phones. it seems to be a must have device. if you look at what's happened to the cell phone market, our business, the amount of dollar content, continues to expand in each generation phone. we're able to grow our revenues because we want, again, connected to our mobile data and we want it faster and we want our battery life to last longer. >> bob, thank you very much nor joining us, congratulations on your earnings last night. >> thank you again for having
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us, becky. >> coming up, mcdonald's out with results and jim cramer's take on all the earnings reports and what he expects from apple. that report later. tomorrow, andrew will be holding our facebook office hours from davos. you can ask him a question at 9:00 a.m. eastern right after the show. go to "squawk" cnbc facebook beige or like us. i really don't care, i'm not really here for people to like me. >> everybody loves you. >> thanks.
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mcdonald's reporting fourth quarter results this morning. joining us now on the "squawk" newsline. at morningstar. any surprises, .2% gain in january, global comps now negative. that's, i guess, some what disappointing, r.j.? >> that's the key take away, what everyone is focused on on a two year comp basis, it represents a sharp deceleration from what we saw in december. peeling back the numbers, it has to do more with emphasis on the
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dollar menu translating into a lower transaction size and doesn't indicate real d degradation in terms of traffic but keel an eye stock, or if yon it, what region of the world do you want to watch the results most closely? what's the most important region right now? >> i think the first and foremost in the u.s., the company is facing a lot more competition from research competitors, in the form of burger king and wendy's, and some of the specialty changes such as five guys. so you really have to watch what they have in the product pipeline and if they can turn this around. the company will face easier come pay i sons beyond the first quarter, but what the market is looking for is strength in the product pipeline after a disappointing year in 2012. really look there. secondarily, i think you have to look at china, where the company is making a pretty big push in that market. >> to have a good year, are you saying new product, they still
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need to innovate? do they ever run out of innovation at a fast-food restaurant? >> they can have a down year. i think the companies will admit 2012 wasn't the greatest year they've had in product innovation. i think we'll see at least one new presume yum burger on the menu, possibly in the first half of the year. and the mighty wing program they had in a few test markets. i expect new beverage products in the market. i think that's the key thing to look for. that's what the catalyst that drives the stock in the next couple of months. >> okay. so you're talking about -- must be like a chicken wing product. and the beverage, are you talking coffee products or dessert? >> i would say more coffee. but also the expansion of the frappes. >> it's a $12 stock not too long ago. so after they lost a couple of ceos, those tragedies, skinner got it back on track and the new
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guy is good, too, i think. >> i would agree. this company has had an unbelievable run the last couple of years. >> incredible. >> a lot of it has to do with product innovation, and cost control. last year was an odd year, a perfect storm year for the company. but i do agree that don thompson has the right ideas to get the thing back on track. >> all right. >> they have a great chairman. andy was a wonderful guy. i sure they don't change the french fries. >> and a great clown, ronald. r.j., thank you. appreciate it. >> absolutely. >> okay. >> let's get down to the new york stock exchange. jim cramer joins us right now. jim, your take on mcdonald's? >> not as bad as people thought. there are a lot of companies reporting numbers, that's not that good. a lot of people saying, the comparison will get difficult. but the stock doesn't go down, because it's just relief rally.
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mcdonald's had a hard year last year. i can understand why people say, whew, that's not so bad. this stock underperformed last year, let's buy some. >> how about ibm? >> the level of confidence in that is incredible. they have the big $20 target for 2015. that's no longer going to be an issue. this is a company that is making a lot more money per sales than anyone else. 90% margins in software. really a fabulous conference call. >> tell me, what should i do? buy apple today? or sell apple today? >> just hold apple. 37% gross margins or less. the stock goes down a lot. >> does it go down a lot, jim? >> if they don't do 37% gross margins, they've got to do better than that. look, i think that this is an inexpensive stock. everybody's focused on it, yet there's so much money being made
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in google and ibm. look, apple does a plus-37. >> it's exciting. >> it is exciting. >> what we've seen setting up to, we don't know, and it's kind of like -- maybe we already had an inflection point. maybe it's greeted with just a big yawn when you actually see the results. but i don't know. with so much action in the stock in the last quarter. >> you know, that is one number we need to see. if we see 39% gross margins, we see 41%, the stock will go higher. if we see lower than that, lower than what they guided to, i think the stock gets hit. it's a shame it's one number and we have no idea what that number's going to be. look at google. google was good, and the stock is fine. ibm was good and the stock was fine. not great. if you do something good, this market rewards it quickly. >> as a network, do you think we could get away with, we did rise above. what about a campaign on growth? anything that is a negative for job growth, or for economic
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growth that we call people out on that? anything's a positive we reward people for that and get a new slogan like grow forward, or grow up, or -- would that be too partisan to look for growth? the other side might have a redistribute button instead of a growth button. >> i think if we could have a grow here button that would be great. >> grow here? >> in other words, bring the business back here. grow here. and i want to see what you're saying. grow there, it doesn't help. >> it's a global -- you know, we expect people to bring their businesses over here, too, though. now you're sounding protective. >> i just think if you have -- if you need natural gas as your feed stock, we're the cheapest place on earth. why aren't you building plants here. we need refineries -- >> what's going to happen with excel? he can't do it after that speech. >> no. move it by train, which is far more dangerous, far more spills. but it can be done very quickly.
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move it by train. >> fracking, i don't want to make matt damon mad. >> he was at the first drake oil, wasn't he? >> plus, remember, he was a jen use at harvard. oh, no, that's a movie. >> how do you like them apples. >> you're right. i forgot that that was fantasy. you're so right. >> your point, jim, is really something. we are the lowest natural gas energy producers in the world. we should have more plants here. more manufacturing here. >> because it's hydrocarbon infrastructure. it's dirty. we should be building plants that have windows attached to them, solar, and let everybody beat us around the world with that. with the highest cost energy. >> all right. thanks, jimbo. final thoughts from jim, and alternatives to kick the can, because we're not going to use moving the ball down the field. that's a good thing. [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪
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